Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

Interesting char their. So, the base print WAYYYYYY back in 1790. Looks to be about 6.5%. Was that set by the founding fathers? Can anyone tell me wha the long term average rates is going back to the beginning. Based on looking at the chart, I can assume it would be at or near that very 6.5% rate.

The Founding fathers were way smarter than us. We have fucked everything up beyond belief. BUT…based on current government views….all those founding fathers would be considered domestic terrorists, and thanks to the newly enacted NDAA would probably be rounded up and shipped off to some prison somewhere. Disagreeing with our leaders is dangerous to ones well being. In fact….reading my post could be considered dangerous as well. That’s OK, we have people like Winston and O’brien out there to fix postings like this. Some time in the future my post will read soemthing like, “Our double plus good leaders have saved us all from our own self destruction” Now move on and go read about American Idol.

The “noise” since ~1990 is a noticeable difference from earlier up/down swings. Any idea why or the implications? Just information and prices moving faster (computers everywhere) or is there something more, such as a much more global economy?

I also love these charts & types of posts & the thoughtful analysis that goes with it — the main reason I frequent this site. Is there a tag you could mark these historical charts with? Like, say, “chart p**n?”

- interest rates can stay v v low for a v v long time (see 1940-1950)
- interest rates are heading lower over time
- the 1970s and 1980s were an anomaly. for most the first half of the century 10-yr rates were 4% ish.

I think a lot of people miss… there is a supply/demand issue here. The only time rates will go higher is if there is a huge demand for borrowing and risky assets, either bc of inflation (doesn’t seem to exist) or euphoria. People seem to like safety and thus there is unlimited demand for US treasuries at less than 1%. Why pay more?

Right now 5-1 ARM mortgage rates are 2.25%… is everyone out there borrowing to buy bigger houses? Not enough demand… they go lower.

bottled lightning Says:
January 19th, 2012 at 1:34 pm
“The “noise” since ~1990 is a noticeable difference from earlier up/down swings. Any idea why or the implications? Just information and prices moving faster (computers everywhere) or is there something more, such as a much more global economy?”

As the government continues ignoring the lack of wage growth, problems in wealth disparity in favor of special interest campaign bucks, the Fed is forced to counter with lower rates to induce credit to compensate for diminished consumer buying power.

Marriner Eccles, Fed chair from 1934 to 1948, noted this over 60 years ago, likening unregulated capitalism to a game of poker where the losing players are forced to borrow more and more until they can no longer pay the debt they incur just to stay in the game.

Can you get that in Excel? I’d be curious if a dollar invested in 1812 at the long term interest rate had the same purchasing power today – probably so as a penny invested at 6% interest (which looks about right as the average return over the last 200 years) would be worth $1151 today (not that you’d be enjoying your gains after 200 years, but it does go to show why wealthy families stay wealthy).

Would be interesting to overlay debt/gdp ratio on same graph. Would show that the US cannot afford to raise interest rates – since it would go bankrupt (see Japan…) pretty quickly. So risk in US bonds might not be that high in USD terms, but a poor bet in other currencies…

Say Hello

About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

Quote of the Day

"The largest Asian central banks have gone on record that they are curbing their purchases of US debt. And they are also diversifying their huge reserves, steadily moving away from the dollar. The risks have simply become too many and too serious." -W. Joseph StroupeEditor, Global Events

Sign Up For My Newsletter

Get subscriber only insights and news delivered by Barry every two weeks.